Storms On The Horizon by Richard Fisher, President and CEO of the Federal Reserve Bank of Dallas

This is a must read about the storms on the horizon, regarding out of control federal entitlement spending griping our nation. It comes out of the Federal Reserve Bank of Dallas, a presentation by its President and CEO, Richard Fisher and it discusses the fiscal disaster we currently find ourselves living in.

Happy's summary. We are all screwed. Every last one of us. Unless a massive shift of policy is instituted today, we leave no future for ourselves or our children. The entitlements we currently support are ponzi schemes a thousand times larger than Madoff and his thieves.

Stating the obvious, we are screwed. What would you have to do to get make the unfunded mandates funded?

Either increase federal tax revenue 68% starting today, and continue it forever. Good luck with that. When you tax something, anything, you will get less of it. Nobody knows what tax rate could support that without destroying the economy in the process.

The issue isn't not enough taxes. The issue is a government that can not say no to its constituents. Now, I know some of you view Obama as your messiah, but I'm sure even he knows he can't generated 99 trillion dollars on the backs of the rich. So the question is, does he have the guts to tell you no before it's too late? It takes a real leader to tell his followers no. Right now, our leaders are promising everything and they will ultimately be able to deliver on nothing.

6
Outbursts:

I wish everyone would stop calling Mcare/SS a Ponzi scheme. It is an insult to Mr. Ponzi. At least only victimized the willing. In both of these cases, just try to avoid the scheme and the IRS will appear on your doorstep with guns and garnishments and bank account attachments. WHOLE other kettle of fish.

Thanks for posting this. It's an awesome, terrifying reality check. Funny how we live in an allegedly scientific society, but present liberals with actual numbers and they say, 'can't be true...I don't believe it...I don't want it to be true...it's the fault of the rich and big business.'

Add to the budge issues the constant mantra of 'overpopulation.' But if the population falls, the catastrophe only comes fast, since there are fewer folks to work and tax.

In 1998, the life insurance policies in force in the US was $14.471 trillion, increasing at about a trillion a year. It is now probably close to $25 trillion. Do you believe that the insurance companies currently have that much money? Of course not. They depend on a continuing stream of premium and investment income. How is this different from SS or Medicare? How is it not a Ponzi scheme.

How is insurance not a Ponzi scheme? The answer is, insurance companies attempt to make the “infinite horizon discounted value” of their premiums equal to the “infinite horizon discounted value” of their promises. Indeed, this is required by law.

In other words, insurance companies use their mad math skillz (actuarial tables, etc) to calculate the future cost of their promises, then they charge premiums at a level that GUARANTEE they will be able to cover that cost. This has the happy effect that, if people the insurance-buying population stops growing, insurance companies will not go bankrupt because their customers have already paid for their promised benefits.

That assumes that their math is right, of course, which is an interesting question but way beyond the scope of this topic!

The current Mcare/SS schemes, on the other hand, can be mathematically proven to be insolvent and unsustainable. If Mcare/SS were subject to the same regulations as private insurance, they would long ago have been forced to declare bankruptcy.